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Ouzo has its roots in tsipouro, which is said to have been the work of a group of 14th-century monks on Mount Athos. One version of it was flavoured with anise. This version eventually came to be called ouzo.[1][page needed]

Modern ouzo distillation largely took off in the beginning of the 19th century following Greek independence. The first ouzo distillery was founded in Tyrnavos in 1856 by Nikolaos Katsaros, giving birth to the famous ouzo Tyrnavou. When absinthe fell into disfavour in the early 20th century, ouzo was one of the products whose popularity rose to fill the gap; it was once called "a substitute for absinthe without the wormwood".[2] In 1932, ouzo producers developed a method of distillation using copperstills that is now the standard method of production. One of the largest producers of ouzo today is Varvayanis (Βαρβαγιάννης),[citation needed] located in the town of Plomari in the southeast portion of the island of Lesbos, while in the same town Pitsiladi (Πιτσιλαδή), a variety of high-quality ouzo, is also distilled.

Ouzo is usually mixed with water, becoming cloudy white, sometimes with a faint blue tinge, and served with ice cubes in a small glass. Ouzo can also be drunk straight from a shot glass.

Ouzo is often served with a small plate of a variety of appetizers called mezes, usually small fresh fish, fries, olives and feta cheese. Ouzo can be described to have a similar taste to absinthe which is liquorice-like, but smoother.

The origin of the name "ouzo" is disputed. A popular derivation is from the Italian "uso Massalia"—for use in Marseille—stamped on selected silkworm cocoons exported from Tyrnavos in the 19th century. According to anecdote, this designation came to stand for "superior quality", which the spirit distilled as ouzo was thought to possess.[5]

Oldest Ouzo Distillery

During a visit to Thessaly in 1896, the late professor Alexander Philadelpheus delivered to us valuable information on the origins of the word "ouzo", which has come to replace the word "tsipouro". According to the professor, tsipouro gradually became ouzo after the following event: Thessaly exported fine cocoons to Marseilles during the 19th century, and in order to distinguish the product, outgoing crates would be stamped with the words "uso Massalia"—Italian for "to be used in Marseille". One day, the Ottoman Greek consulate physician, named Anastas (Anastasios) Bey, happened to be visiting the town of Tyrnavos and was asked to sample the local tsipouro. Upon tasting the drink, the physician immediately exclaimed: "This is uso Massalia, my friends"—referring to its high quality. The term subsequently spread by word of mouth, until tsipouro gradually became known as ouzo.

—The Times of Thessaly, 1959

However, the major Greek dictionaries derive it from the Turkish word üzüm 'grape'.[6][7][8]

Ouzo production begins with distillation in copper stills of 96% alcohol by volume (ABV) rectified spirit. Anise is added, sometimes with other flavorings such as star anise, fennel, mastic, cardamom, coriander, cloves, and cinnamon. The flavoring ingredients are often closely guarded company "recipes", and distinguish one ouzo from another.[9] The result is a flavored alcoholic solution known as flavored ethyl alcohol, or more commonly as ouzo yeast—μαγιά ούζου in Greek—the term for "yeast" being used by Greeks metaphorically to denote that it serves as the starting point for ouzo production.

The ouzo yeast is then distilled. After several hours of distillation, a flavored distillate of approximately 80 ABV (% Alcohol By Volume) is produced. The spirit at the beginning of the distillation (heads) and end (tails) is usually removed to avoid light and heavy alcohols and aromatics. The heads and tails are usually mixed and distilled again. The product of this second distillation can be used to produce a different quality ouzo.

This technique of double-distillation is used by some distillers to differentiate their products.

Makers of high-quality "100% from distillation" ouzo proceed at this stage with water dilution, bringing the ouzo to its final ABV. But most producers combine the "ouzo yeast" with less expensive ethyl alcohol flavored with 0.05 percent natural anethole, before water dilution. Greek law dictates that in this case the ouzo yeast cannot be less than 20 percent of the final product.

Sugar may be added before water dilution, which is done mostly with ouzo from Southern Greece.

The final ABV is usually between 37.5 and 50 percent; the minimum allowed is 37.5 percent.[10]

In modern Greece, ouzeries (the suffix -erie is imported from French) can be found in nearly all cities, towns, and villages. These café-like establishments serve ouzo with mezedes—appetizers such as octopus, salad, sardines, calamari, fried zucchini, and clams, among others. It is traditionally slowly sipped (usually mixed with water or ice) together with mezedes shared with others over a period of several hours in the early evening.

In other countries it is tradition to have ouzo in authentic Greek restaurants as an aperitif, served in a shot glass and deeply chilled before the meal is started. No water or ice is added but the drink is served very cold, enough to make some crystals form in the drink as it is served.

Ouzo can colloquially be referred to as a particularly strong drink, the cause of this being its sugar content. Sugar delays ethanol absorption in the stomach, and may thus mislead the drinker into thinking that they can drink more as they do not feel tipsy early on. Then the cumulative effect of ethanol appears and the drinker becomes inebriated rather quickly. This is why it is generally considered poor form to drink ouzo "dry hammer" ("ξεροσφύρι", xerosfýri, an idiomatic expression that means "drinking alcohol without eating anything") in Greece. The presence of food, especially fats or oils, in the upper digestive system prolongs the absorption of ethanol and ameliorates alcohol intoxication.

Ouzo is a clear liquid. However, when water or ice is added, ouzo turns a milky-white colour. This is because anethole, the essential oil of anise, is completely soluble in alcohol at approximately 38% ABV and above, but not in water. Diluting the spirit causes it to separate creating an emulsion, whose fine droplets scatter the light. This process is called louching, and is also found while preparing absinthe.